Is Your ESG Policy Working For You Or The Other Way Around?

Matthew Margetts, director of sales and marketing at Smarter Technologies By Matthew Margetts, director of sales and marketing at Smarter Technologies.

According to Google Trends, searches for the term ‘ESG’ (environmental, social, governance) have increased by 770% in the last five years in the UK alone.

A topic that was once in the realm of relative obscurity has become a hot topic around the board room table, but that doesn’t mean that companies have it waxed.

In this piece, Matthew Margetts, director of sales and marketing at Smarter Technologies discusses the facts and the future of ESG.

According to a survey by legal services group DWF, three out of five businesses (59%) have missed out on work because of their company's ESG commitments.

The survey also revealed that half of the companies surveyed were struggling to implement strong ESG policies.

Other stats from the survey of 480 senior executives across 13 countries revealed that:

  • 40% of companies found recruiting key talent difficult due to weak environmental, social governance policies
  • Only 35% stated they had fully considered the ethical and legal implications relating to ESG disclosure and commitments

Despite the lack of both skills and knowledge, 46% of stakeholders have begun to increase pressure on boards on ESG matters.

Matthew said, “The message from the survey is clear: companies are starting to understand that without a clear, ambitious, and transparent ESG strategy in place in 2022, they will pay the costs.

“The climate crisis is becoming more urgent by the day, and the pandemic has exposed inequalities in the way we work.

"Today’s consumers and investors are demanding transparency on companies’ ESG footprints, backed up by legislation set to make this reporting mandatory.”

Measures Of Success

It’s been proven that ESG improvements correlate with earnings growth for companies.

But, to understand where to focus and gain the most value, businesses need to understand their current impact and be able to continually monitor and report on it.

For many companies, this is easier said than done, for a number of reasons, including:

  • Lack of clarity from governing bodies on the correct steps to follow
  • A confusing mix of reporting standards
  • Insufficient centralised, user-friendly information is available

As a result, many SMEs are turning to Software-as-a-Service (SaaS) solutions for businesses hoping to measure their ESG using smart technology

By investing in systems and technology to measure ESG progress, they can begin to grasp their specific circumstances and requirements and demonstrate transparent (and profitable) ESG activities and commitments.

Matthew concluded, “ESG is the megatrend of the decade, and interest and investment in this area will continue to grow to new heights. As investors seek to invest more in companies with high ESG standards, companies that have a strong ESG focus will be better positioned to attract interest and investment.

I also believe that clarity around ESG requirements and obligations will continue to improve as technology evolves to support more transparency, personalisation and engagement. In a few short years, almost every organisation will either outsource the role of constantly adapting to changing compliances and demands of different stakeholders, or rely on ESG software developments to help guide and implement their ESG strategies. Either way, integrating ESG is a smart, and indeed essential, move for businesses of today.”